<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box: / / Confidential, for Use of the
/ / Preliminary Proxy Statement Commission Only (as permitted
/X/ Definitive Proxy Statement by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
/ / Rule 240.14a-11(c) or / / Rule 240.14a-12
Washington Scientific Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rule o-11(c)(1)(ii), 14a-6(i)(1) or Item
22(a)(2) of Schedule 14A
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[WSI LOGO]
WASHINGTON SCIENTIFIC INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 7, 1999
Notice is hereby given that the Annual Meeting of Shareholders of
Washington Scientific Industries, Inc. (the "Company") will be held at the
Marriott City Center Hotel located at 30 South Seventh Street, Minneapolis,
Minnesota, on Thursday, January 7, 1999, at 3:30 p.m., Central Standard Time,
for the following purposes:
1. To approve a proposal to amend the Company's Articles of Incorporation
to change the name of the Company to "WSI Industries, Inc.".
2. To approve a proposal to amend the Company's Articles of Incorporation
to authorize "blank check" preferred stock.
3. To approve a proposal to amend the Company's 1994 Stock Option Plan.
4. To elect six directors to hold office until the next Annual Meeting of
Shareholders or until their successors are elected.
5. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on November 9,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
By Order of the Board of Directors
Gerald E. Magnuson, SECRETARY
Minneapolis, Minnesota
December 4, 1998
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF SHAREHOLDERS,
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR
NOT YOU EXPECT TO ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY
REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY SO DESIRE. THIS PROXY IS
SOLICITED ON BEHALF OF THE COMPANY.
<PAGE>
[WSI LOGO]
WASHINGTON SCIENTIFIC INDUSTRIES, INC.
PROXY STATEMENT
-----------------
This Proxy Statement is furnished to the shareholders of Washington
Scientific Industries, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be voted
at the Annual Meeting of Shareholders to be held on January 7, 1999, or any
adjournment or adjournments thereof. The cost of this solicitation will be
borne by the Company. In addition to solicitation by mail, officers,
directors and employees of the Company may solicit proxies by telephone,
telegraph or in person. The Company may also request banks and brokers to
solicit their customers who have a beneficial interest in the Company's
Common Stock registered in the names of nominees and will reimburse such
banks and brokers for their reasonable out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by written
notice to the Secretary of the Company, by receipt of a proxy properly signed
and dated subsequent to an earlier proxy, or by revocation of a written proxy
by request in person at the Annual Meeting; but if not revoked, the shares
represented by such proxy will be voted. The Company's offices are located
at 2605 W. Wayzata Boulevard, Long Lake, Minnesota 55356, and its telephone
number is (612) 473-1271. The mailing of this proxy statement to
shareholders of the Company commenced on or about December 4, 1998.
The Company currently has only one class of securities, Common Stock, of
which 2,448,800 shares were issued and outstanding and entitled to vote at
the close of business on November 9, 1998. Each share is entitled to one
vote and shareholders have cumulative voting rights in connection with the
election of directors in the event any shareholder gives written notice of
intent to cumulate votes to any officer of the Company before the meeting or
to the presiding officer at the meeting. A shareholder may cumulate votes
for the election of directors by multiplying the number of votes to which the
shareholder may be entitled by six (the number of directors to be elected)
and casting all such votes for one nominee or distributing them among any two
or more nominees. Only shareholders of record at the close of business on
November 9, 1998, will be entitled to vote at the meeting. The presence, in
person or by proxy, of the holders of a majority of the shares of Common
Stock entitled to vote at the Annual Meeting of Shareholders constitutes a
quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a
meeting of shareholders generally must be approved by the affirmative vote of
the holders of a majority of the voting power of the shares present, in
person or by proxy, and entitled to vote on that item of business. However,
if the shares present and entitled to vote on that item of business would not
constitute a quorum for the transaction of business at the meeting, then the
item must be approved by a majority of the voting power of the minimum number
of shares that would constitute such a quorum. Votes cast by proxy or in
person at the Annual Meeting of Shareholders will determine whether or not a
quorum is present. Abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of the matter submitted to
the shareholders for a vote. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter.
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SECURITY OWNERSHIP OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
The following table includes information as of November 9, 1998,
concerning the beneficial ownership of Common Stock of the Company by (i)
shareholders known to the Company to hold more than five percent of the
Common Stock of the Company, (ii) each of the directors of the Company, (iii)
each executive officer named in the table on page 11 and (iv) all officers
and directors of the Company as a group. Unless otherwise indicated, all
beneficial owners have sole voting and investment power over the shares held.
<TABLE>
<CAPTION>
Name and Address Percent
of Beneficial Owner Amount of Class
------------------- ------ --------
<S> <C> <C>
Paul Baszucki(1) 6,250 (2) *
Melvin L. Katten(1) 51,050 (2) 2.08%
Gerald E. Magnuson(1) 9,590 (2) *
George J. Martin(1) 48,300 (2) 1.97%
Eugene J. Mora(1) 6,250 (2) *
Michael J. Pudil(1)(3) 140,001 (2) 5.41%
Paul D. Sheely -- --
James J. Valento(4) 300 (2) *
All Officers and Directors 261,741 (2) 10.03%
as a Group (7 persons)
</TABLE>
- ------------------
* Less than one percent.
(1) Serves as a director of the Company and has been nominated for re-election.
(2) Includes shares which may be purchased within sixty days from the date
hereof pursuant to outstanding stock options in the amount of 4,250 shares
for each of Messrs. Baszucki, Katten, Magnuson, Martin and Mora; 140,001
shares for Mr. Pudil; and 161,251 shares for all officers and directors as
a group.
(3) Serves as an executive officer of the Company and appears in the table on
page 11 hereof.
(4) Mr. Valento resigned as an executive officer of the Company effective
July 12, 1998. He appears in the table on page 11 hereof.
1. CHANGE OF CORPORATE NAME
The Board of Directors has approved, subject to approval by the
shareholders at the Annual Meeting, an amendment to the Company's Amended
Articles of Incorporation to change the name of the Company to "WSI
Industries, Inc.". The Board and the Company believe that the current name
does not accurately reflect the nature of the Company's business and believe
it would be desirable to adopt a shorter, more concise corporate identity.
The Company does not intend to change its trading symbol for its common
stock, traded on The Nasdaq National Market System as "WSCI". As soon as
practicable following the Annual Meeting of
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Shareholders, the Company will file with the Secretary of State of the State
of Minnesota Articles of Amendment to the Amended Articles of Incorporation.
The change in the Company's name will not affect the validity or
transferability of the Company's outstanding securities nor will it affect
the Company's capital or corporate structure. The Company's shareholders will
not be required to exchange any certificates representing any of the
Company's securities held by them.
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of a majority of
the shareholders present in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THIS PROPOSAL 1.
2. AUTHORIZATION OF PREFERRED STOCK
GENERAL
The Board of Directors approved at its meeting held October 22, 1998 and
now recommends to the shareholders the amendment and restatement of Paragraph
5.(a) of the Company's Articles of Incorporation to create a new class of
"blank check" preferred stock consisting of 500,000 shares by filing Articles
of Amendment to the Amended Articles of Incorporation.
CREATION OF "BLANK CHECK" PREFERRED STOCK
The Board of Directors adopted a resolution unanimously approving and
recommending to the shareholders for their approval an amendment to the
Articles of Incorporation to provide therein for the creation of 500,000
shares of "blank check" preferred stock. The Board of Directors believes
that having such blank check Preferred Stock available for, among other
things, possible issuance in connection with such activities as public or
private offerings of shares for cash, dividends payable in stock of the
Company, acquisitions of other companies or businesses, and otherwise is in
the best interest of the Company and its shareholders. As of the date
hereof, the Company does not have any agreements or understandings with any
third party relating to the possible issuance of any shares of Preferred
Stock.
The term "blank check" preferred stock refers to stock for which the
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof (collectively, the
"Limitations and Restrictions") are determined by the board of directors of a
company. As such, the Board of Directors of the Company will be entitled to
authorize the creation and issuance of 500,000 shares of Preferred Stock in
one or more series with such Limitations and Restrictions as may be
determined in the Board of Director's sole discretion, with no further
authorization by shareholders required for the creation and issuance thereof.
In the event of approval of this proposal by the Company's shareholders,
the Board of Directors will be required to make any determination to
designate, reserve for issuance or issue shares of Preferred Stock based on
its judgment as to the best interests of the shareholders and the Company.
Although the Board of Directors has no present intention of doing so, it
could issue shares of Preferred Stock that may, depending on the terms of
such series, make more difficult or discourage an attempt to obtain control
of the Company by means of a merger, tender offer, proxy contest or other
means. Such shares could be used to create voting
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or other impediments or to discourage persons seeking to gain control of the
Company and could also be privately placed with purchasers favorable to the
Board of Directors in opposing such action. In addition, the Board of
Directors could authorize holders of a series of Preferred Stock to vote
either separately as a class or with the holders of the Company's currently
outstanding Common Stock, on any merger, sale or exchange of assets by the
Company or any other extraordinary corporate transaction. The issuance of
new shares also could have a dilutive effect on the voting power of existing
holders of Common Stock and on earnings per share and could be used to dilute
the stock ownership of a person or entity seeking to obtain control of the
Company should the Board of Directors consider the action of such person or
entity not to be in the best interests of the shareholders and the Company.
TEXT OF AMENDMENT
Under the proposal, Paragraph 5.(a) of the Company's Amended Articles of
Incorporation would be amended in its entirety to read:
"The corporation is authorized to issue two classes of stock, to
be designated, respectively, "Common Stock" and "Preferred Stock".
The total number of shares which the corporation is authorized to
issue is 10,500,000 shares, of which 10,000,000 shall be Common Stock
and 500,000 shall be Preferred Stock. The Preferred Stock may be
issued from time to time as shares of one or more series. Subject to
the provisions hereof and the limitations prescribed by law, the Board
of Directors is authorized, by adopting resolutions providing for the
issuance of Preferred Stock of any particular series, to establish the
number of shares of Preferred Stock to be included in each such
series, and to fix the designation, relative powers, preferences,
rights, qualifications, limitations and restrictions thereof,
including without limitation the right to create voting, dividend and
liquidation preferences greater than those of Common Stock. The
common shares of the corporation shall entitle the holder thereof to
one vote per share upon all questions coming before the shareholders
of the corporation at any shareholder meeting"
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of a majority of
the shareholders present in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THIS PROPOSAL 2.
3. AMENDMENTS TO 1994 STOCK PLAN
GENERAL INFORMATION
On September 29, 1994, the Company's Board of Directors adopted, and on
January 12, 1995 the shareholders of the Company approved and ratified the
adoption of, the Washington Scientific Industries, Inc. 1994 Stock Plan (the
"1994 Plan"). The purpose of the 1994 Plan is to enable the Company and its
subsidiaries to retain and attract key employees, consultants and
non-employee directors who contribute to the Company's success by their
ability, ingenuity and industry, and to enable such key employees,
consultants and non-employee directors to participate in the long-term
success and growth of the Company by giving them a proprietary interest in
the Company. The 1994 Plan authorizes the granting of awards in
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any of the following forms: (i) stock options, (ii) stock appreciation
rights, (iii) restricted stock, (iv) deferred stock and (v) other rewards.
The principal features of the 1994 Plan are summarized below.
SHARES AVAILABLE UNDER 1994 PLAN. The maximum number of shares of
Common Stock reserved and available under the 1994 Plan for awards is 250,000
(subject to possible adjustment in the event of stock splits or other similar
changes in the Common Stock). Included in this Proposal 3 is an amendment to
increase the number of shares reserved under the 1994 Plan by 200,000
shares. Shares of Common Stock covered by expired or terminated stock
options and forfeited shares of restricted stock or deferred stock may be
used for subsequent awards under the 1994 Plan.
ELIGIBILITY AND ADMINISTRATION. Officers and other key employees of the
Company and its subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and
its subsidiaries, as well as consultants and non-employee directors, are
eligible to be granted awards under the 1994 Plan. The 1994 Plan is
administered by the Board or, in its discretion, by a committee of not less
than three "non-employee directors," as defined in the 1994 Plan (the
"Committee"), who are appointed by the Board of Directors. The term "Board"
as used in the 1994 Plan refers to the Board or, if the Board has delegated
its authority, the Committee. The Board has the power to make awards,
determine the number of shares covered by each award and other terms and
conditions of such awards, interpret the 1994 Plan, and adopt rules,
regulations and procedures with respect to the administration of the 1994
Plan.
AMENDMENTS TO THE 1994 PLAN
The proposed amendments to the 1994 Plan are as follows:
INCREASE IN THE NUMBER OF SHARES AVAILABLE UNDER THE 1994 PLAN. The
1994 Plan authorizes the issuance of 250,000 shares of Common Stock pursuant
to stock options, restricted stock and deferred stock granted under the 1994
Plan. On August 26, 1998, the Board of Directors amended the 1994 Plan,
subject to ratification and approval of the shareholders, to increase the
total number of shares available under the 1994 Plan by 200,000 shares to a
total of 450,000 shares. There were outstanding on November 16, 1998 options
to purchase 134,000 shares under the 1994 Plan. Therefore, absent
shareholder approval of this amendment to the 1994 Plan, only 107,666 shares
remain available under the 1994 Plan for awards. The Board of Directors has
deemed it advisable to increase the shares available for grant under the 1994
Plan by 200,000 shares to facilitate future stock option grants, restricted
stock awards and deferred stock awards.
AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS. On August 26, 1998, the
Board of Directors amended the 1994 Plan, subject to ratification and
approval of the shareholders, to provide for an automatic grant to
non-employee directors of an option to purchase 2,000 shares of the Company's
Common Stock at the fair market value of such shares on the date of grant
upon such person's election and each subsequent re-election as a director of
the Company. Prior to the adoption of that amendment, each person elected or
re-elected as a director was granted an option to purchase 1,000 shares of
the Company's Common Stock. Both before and after the amendment, all such
options will have an option exercise price equal to the fair market value of
the Company's Common Stock on the date of grant. All options expire 30 days
after a director's departure from the Board. If this amendment is approved
by the shareholders, it will be effective for each director upon election in
1999.
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SUMMARY OF THE 1994 PLAN
STOCK OPTIONS. The Board may grant stock options that either qualify as
"incentive stock options" under the Code or are "non-qualified stock options"
in such form and upon such terms as the Board may approve from time to time.
Stock options granted under the 1994 Plan may be exercised during their
respective terms as determined by the Board. The purchase price may be paid
by tendering cash or, in the Board's discretion, by tendering promissory
notes or Common Stock. The optionee may elect to pay all or part of the
option exercise price by having the Company withhold upon exercise of the
option a number of shares with a fair market value equal to the aggregate
option exercise price for the shares with respect to which such election is
made. No stock option is transferable by the optionee or exercisable by
anyone else during the optionee's lifetime.
Stock options may be exercised during varying periods of time after a
participant's termination of employment, depending upon the reason for the
termination. Following a participant's death, the participant's stock
options may be exercised to the extent they were exercisable at the time of
death by the legal representative of the estate or the optionee's legatee for
a period of one year or until the expiration of the stated term of the
option, whichever is less. The same time periods apply if the participant is
terminated by reason of disability. If the participant retires, the
participant's stock options may be exercised to the extent they were
exercisable at the time of retirement or for a period of three months (or
such longer period as determined by the Board at the time of retirement) from
the date of retirement or until the expiration of the stated term of the
option, whichever is less. If the participant is involuntarily terminated
without cause, the participant's options may be exercised to the extent they
were exercisable at the time of termination for the lesser of three months or
the balance of the stated term of the option. If the participant's
employment is terminated for cause, the participant's stock options
immediately terminate. These exercise periods may be reduced by the Board
for particular options. The Board may, in its discretion, accelerate the
exercisability of stock options which would not otherwise be exercisable upon
death, disability or retirement.
No incentive stock option may be granted under the 1994 Plan after
September 29, 2004. The term of an incentive stock option may not exceed 10
years (or 5 years if issued to a participant who owns or is deemed to own
more than 10% of the combined voting power of all classes of stock of the
Company, any subsidiary or affiliate). The aggregate fair market value of
the Common Stock with respect to which an incentive stock option is
exercisable for the first time by an optionee during any calendar year may
not exceed $100,000. The exercise price under an incentive stock option may
not be less than the fair market value of the Common Stock on the date the
option is granted (or, in the event the participant owns more than 10% of the
combined voting power of all classes of stock of the Company, the option
price must be not less than 110% of the fair market value of the stock on the
date the option is granted). The exercise price for non-qualified options
granted under the 1994 Plan may be less than 100% of the fair market value of
the Common Stock on the date of grant.
STOCK APPRECIATION RIGHTS. The Board may grant stock appreciation
rights ("SARs") in connection with all or part of any stock option (with the
exception of options granted to non-employee directors), either at the time
of the stock option grant, or, in the case of non-qualified options, later
during the term of the stock option. SARs entitle the participant to receive
from the Company the same economic value that would have been derived from
the exercise of an underlying stock option and the immediate sale of the
shares of Common Stock. Such value is paid by the Company in cash, shares of
Common Stock or a combination of both, in the discretion of the Board. SARs
are exercisable or transferable only at such times and to the extent stock
options to which they relate are exercisable or transferable. If an SAR is
exercised, the underlying stock option is terminated as to the number of
shares covered by the SAR exercise.
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RESTRICTED STOCK. The Board may grant restricted stock awards that
result in shares of Common Stock being issued to a participant subject to
restrictions against disposition during a restricted period established by
the Board. The Board may condition the grant of restricted stock upon the
attainment of specified performance goals or service requirements. The
provisions of restricted stock awards need not be the same with respect to
each recipient. The restricted stock will be held in custody by the Company
until the restrictions thereon have lapsed. During the period of the
restrictions, a participant has the right to vote the shares of restricted
stock and to receive dividends and distributions unless the Board requires
such dividends and distributions to be held by the Company subject to the
same restrictions as the restricted stock. Notwithstanding the foregoing,
all restrictions with respect to restricted stock lapse 60 days (or less as
determined by the Board) prior to the occurrence of a merger or other
significant corporate change, as provided in the 1994 Plan.
If a participant terminates employment during the period of the
restrictions, all shares still subject to restrictions will be forfeited and
returned to the Company, subject to the right of the Board to waive such
restrictions in the event of a participant's death, total disability,
retirement or under special circumstances approved by the Board.
DEFERRED STOCK. The Board may grant deferred stock awards that result
in shares of Common Stock being issued to a participant or group of
participants upon the expiration of a deferral period. The Board may
condition the grant of deferred stock upon the attainment of specified
performance goals. The provisions of deferred stock awards need not be the
same with respect to each recipient.
Upon termination of employment for any reason during the deferral period
for a given award, the deferred stock in question will be forfeited by the
participant, subject to the Board's ability to waive any remaining deferral
limitations with respect to a participant's deferred stock. During the
deferral period, deferred stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered and any dividends declared with
respect to the number of shares covered by a deferred stock award will either
be immediately paid to the participant or deferred and deemed to be
reinvested in additional deferred stock, as determined by the Board. The
Board may allow a participant to elect to further defer receipt of a deferred
stock award for a specified period or until a specified event.
OTHER AWARDS. The Board may grant Common Stock, other Common Stock
based and non-common stock based awards including, without limitation, those
awards pursuant to which shares of Common Stock are or in the future may be
acquired, awards denominated in Common Stock units, securities convertible
into Common Stock, phantom securities and dividend equivalents. The Board
shall determine the terms and conditions of such Common Stock, Common Stock
based and non-common stock based awards provided that such awards shall not
be inconsistent with the terms of the 1994 Plan.
FEDERAL INCOME TAX CONSEQUENCES
STOCK OPTIONS. There will not be any federal income tax consequences to
either the participant or the Company as a result of the grant to a
participant of an Incentive Stock Option under the 1994 Plan. The exercise
by a participant of an Incentive Stock Option also will not result in any
federal income tax consequences to the Company or the participant, except
that (i) an amount equal to the excess of the fair market value of the shares
acquired upon exercise of the Incentive Stock Option, determined at the time
of exercise, over the consideration paid for the shares by the participant
will be a tax preference item for purposes of the alternative minimum tax,
and (ii) the participant may be subject to an additional excise tax if any
amounts are treated as "excess parachute payments" within the meaning of the
Code.
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If a participant disposes of the shares acquired upon exercise of an
Incentive Stock Option, the federal income tax consequences will depend upon
how long the participant has held the shares. If the participant does not
dispose of the shares within two years after the Incentive Stock Option was
granted, nor within one year after the participant exercised the Incentive
Stock Option and the shares were transferred to the participant (the
"Applicable Holding Periods"), then the participant will recognize a
long-term capital gain or loss. If the Applicable Holding Periods are not
satisfied, then any gain realized in connection with the disposition of such
stock will generally be taxable as ordinary compensation income in the year
in which the disposition occurred, to the extent of the difference between
the fair market value of such stock on the date of exercise and the option
exercise price. The Company is entitled to a tax deduction to the extent,
and at the time, the participant realizes compensation income. The balance
of any gain will be characterized as a capital gain. As part of the Taxpayer
Relief Act of 1997, and amendments thereto, Congress modified the maximum
federal income tax rate for most long-term capital gains recognized after May
6, 1997. Under the new law, capital gains resulting from property held for
more than 12 months will be taxed at a maximum rate of 28%, and capital gains
resulting from property held for less than one year will continue to be taxed
at ordinary income rates.
An optionee will not realize taxable compensation income upon the grant
of a non-qualified stock option. As a general matter, when an optionee
exercises a non-qualified stock option, he or she will realize taxable
compensation income at that time equal to the difference between the
aggregate option price and the fair market value of the stock on the date of
exercise. The Company is entitled to a tax deduction to the extent, and at
the time, the participant realizes compensation income.
SARS. The grant of an SAR would not result in income for the
participant or in a deduction for the Company. Upon receipt of shares or
cash from exercise of an SAR, the participant would generally recognize
compensation income, and the Company would be entitled to a deduction,
measured by the fair market value of the shares plus any cash received.
RESTRICTED STOCK AND DEFERRED STOCK. The grant of restricted stock and
deferred stock should not result in immediate income for the participant or
in a deduction for the Company for federal income tax purposes, assuming the
shares are nontransferable and subject to restrictions or to a deferral
period which would result in a "substantial risk of forfeiture" as intended
by the Company and as defined in applicable Treasury regulations. If the
shares are transferable or there are no such restrictions or significant
deferral periods, the participant will realize compensation income upon
receipt of the award. Otherwise, a participant generally will realize taxable
compensation when any such restrictions or deferral period lapses. The
amount of such income will be the value of the Common Stock on that date less
any amount paid for the shares. Dividends paid on the Common Stock and
received by the participant during the restricted period or deferral period
also will be taxable compensation income to the participant. In any event,
the Company will be entitled to a tax deduction to the extent, and at the
time, the participant realizes compensation income. A participant may elect,
under Section 83(b) of the Code, to be taxed on the value of the stock at the
time of award. If the election is made, the fair market value of the stock
at the time of the award is taxable to the participant as compensation income
and the Company is entitled to a corresponding deduction.
WITHHOLDING. The 1994 Plan requires each participant, no later than the
date as of which any part of the value of an award first becomes includible
as compensation in the gross income of the participant, to pay to the Company
any federal, state or local taxes required by law to be withheld with respect
to the award. The Company, to the extent permitted by law, has the right to
deduct any such taxes from any payment otherwise due to the participant.
With respect to any award under the 1994 Plan, if the terms of the award so
permit, a participant may elect to satisfy part or all of the withholding tax
requirements associated with
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the award by (i) authorizing the Company to retain from the number of shares
of Company Common Stock which would otherwise be deliverable to the
participant, or (ii) delivering to the Company from shares of Company Common
Stock already owned by the participant that number of shares having an
aggregate fair market value equal to part or all of the tax payable by the
participant. In that case, the Company would pay the tax liability from its
own funds.
REGISTRATION WITH THE SEC
Upon approval of the amendment to the 1994 Plan by the shareholders, the
Company intends to file a registration statement covering the offering of the
additional shares of Common Stock issuable under the 1994 Plan with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended.
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of a majority of
the shareholders present in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THIS PROPOSAL 3.
4. ELECTION OF DIRECTORS
Six directors will be elected at the Annual Meeting to serve until the
next annual meeting of shareholders or until their successors are elected.
The Board of Directors has nominated for election the six persons named
below. All of the nominees are currently directors of the Company and all
were elected by the shareholders at the 1998 Annual Meeting of Shareholders.
It is anticipated that proxies will be voted for such nominees, and the Board
of Directors has no reason to believe any nominee will not continue to be a
candidate or will not be able to serve as a director if elected. In the
event that any nominee named below is unable to serve as a director, the
persons named in the proxies have advised that they will vote for the
election of such substitute or additional nominees as the Board of Directors
may propose.
The names and ages of the nominees, their principal occupations and
other information is set forth below, based upon information furnished to the
Company by the nominees.
<TABLE>
<CAPTION>
Principal Occupation Director
Name and Age and other Directorships Since
------------ ----------------------- ---------
<S> <C> <C>
Paul Baszucki (58) Chairman of Norstan, Inc., 1988
Minnetonka, Minnesota
(technology); Director of Norstan,
Inc. and G&K Services, Inc.
Melvin L. Katten (62) Senior Partner of Katten Muchin & 1985
Zavis, Chicago, Illinois (law
firm); Director of Star Multicare
Services, Inc.
9
<PAGE>
Gerald E. Magnuson (68) Retired Partner of Lindquist & 1962
Vennum P.L.L.P., Minneapolis,
Minnesota (law firm); Secretary of
the Company; Director of
PremiumWear, Inc., Research,
Incorporated and Sheldahl, Inc.
George J. Martin (61) Chairman of the Company; Private 1983
Consultant; prior to October 1995,
President, Chief Executive Officer
and Chairman of PowCon
Incorporated (manufacturer of
electronic welding systems).
Eugene J. Mora (63) Private Investor; prior to October 1985
4, 1996, President, Chief
Executive Officer and Director of
Amserv Healthcare Inc., LaJolla,
California (provider of home care
services to individuals).
Michael J. Pudil (50) President and Chief Executive 1993
Officer of the Company; Prior to
November 1993, Vice President and
General Manager of Remmele
Engineering, Inc., St. Paul,
Minnesota (contract machining).
</TABLE>
- ------------------
The Board of Directors met seven times during fiscal 1998. Each current
director attended 75% or more of the meetings of the Board of Directors and
any committee on which he served.
The Company has two standing committees, the Compensation Committee and
the Audit Committee. The Compensation Committee, which met two times during
the last fiscal year, is currently comprised of Messrs. Magnuson (Chair),
Baszucki and Katten. The Compensation Committee reviews and makes
recommendations to the Board of Directors regarding salaries, compensation
and benefits of officers and key employees.
The Audit Committee, which met once during the last fiscal year, is
currently comprised of Messrs. Mora (Chair), Baszucki and Katten. Among
other duties, the Audit Committee reviews the internal and external financial
reporting of the Company, reviews the scope of the independent audit and
considers comments by the auditors regarding internal controls and accounting
procedures and management's response to those comments.
The Company does not have a nominating committee. However, the
Company's Bylaws provide that a notice of proposed shareholder nominations
for the election of directors must be timely given in writing to the
Secretary of the Company prior to the meeting at which directors are to be
elected. To be timely, the notice must be given by such shareholders to the
Secretary of the Company not less than 45 days nor more than 75 days prior to
the date corresponding to the date of mailing of the proxy materials for the
previous year's Annual Meeting. The notice to the Company from a shareholder
who intends to nominate a person at the meeting for election as a director
must contain certain information about such shareholder and the person(s)
nominated by such shareholder, including, among other things, the name and
address of record of such shareholder, a representation that the shareholder
is entitled to vote at such meeting and
10
<PAGE>
intends to appear in person or by proxy at the meeting, the name, age,
business and residence addresses and principal occupation of each nominee, a
description of all arrangements or understandings between the shareholder and
each nominee, such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the proposed
nominee(s), and the consent of each nominee to serve as a director if so
elected. The Company may also require any proposed nominee to furnish other
information reasonably required by the Company to determine the proposed
nominee's eligibility to serve as director. If the presiding officer of a
meeting of shareholders determines that a person was not nominated in
accordance with the foregoing procedure, such person will not be eligible for
election as a director.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending August 30, 1998,
August 31, 1997 and August 25, 1996, the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those
years, to Michael Pudil, the Company's President and Chief Executive Officer
and to each of the other most highly compensated officers of the Company in
office at the end of fiscal year 1998, whose total cash compensation exceeded
$100,000 during fiscal year 1998 (together with Mr. Pudil, the "Named
Executive Officers") in all capacities in which they served:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------- Long Term
Compensation
------------
Annual Compensation Awards
--------------------------------------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
--------------------------- ---- ------ ----- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Michael J. Pudil 1998 $182,977 $91,488 0 $2,131
President and 1997 176,021 86,350 70,000 2,459
Chief Executive Officer 1996 171,979 0 10,000 2,114
James J. Valento(2) 1998 87,258 36,357 5,000 935
Vice President, Chief 1997 86,427 42,500 10,000 1,296
Financial Officer, Treasurer, 1996 68,427 0 5,000 672
and Assistant Secretary
</TABLE>
- ------------------
(1) These amounts represent Company's matching contributions to the Company's
401(k) plan on behalf of such employees.
(2) Mr. Valento resigned as an officer on July 12, 1998.
11
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1998
The following table contains information concerning the grant of
stock options under the Company's 1987 and 1994 Stock Option Plans to the
Named Executive Officers as of the end of fiscal year 1998.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------------------------------------------
% of Total Potential Realizable Value at
Number of Options/ Assumed Annual Rates of
Securities SARs Stock Price Appreciation for
Underlying Granted to Exercise or Option Term
Options/SARs Employees in Base Price Expiration ------------------------------
Name Granted Fiscal Year ($/Sh) Date 5% 10%
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James J. Valento 5,000 20% $4.75 (1) (1) (1)
</TABLE>
- ------------------
(1) All of these options expired thirty days following Mr. Valento's resignation
date of July 12, 1998.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers, concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of fiscal year 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options/SARs
Options/SARs at FY-End at FY-End (1)
Shares Acquired ---------------------------- ----------------------------
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Pudil 0 0 140,001 39,999 $534,169 $53,331
James J. Valento 13,334 $45,023 0 0 0 0
</TABLE>
- ------------------
(1) Based on a per share price of $6.625, which was the closing sale price of
the Company's Common Stock on August 28, 1998, the last trading day of the
Company's fiscal year.
PENSION PLAN
The Company has a pension plan for non-union employees of the Company,
including executive officers. The plan provides benefits to all eligible
employees and is applicable to executive officers on the same basis as other
employees. Employees must not be eligible for benefits under that part of
the Company's pension plan covering union employees and must have completed
five years of service to be eligible for retirement benefits. Retirement
benefits are calculated based upon a five-year average of annual salary rates
being paid prior to retirement, all as defined in the plan. The following
table* shows the payments that will be made, after deduction of Social
Security benefits, under the Company's pension plan for non-union employees,
given the years of service and compensation set forth below based on a
retirement age of 65:
12
<PAGE>
<TABLE>
<CAPTION>
Five-Year Annual Pension Upon Retirement With Years of Service Indicated
Average Basic --------------------------------------------------------------
Compensation 10 15 20 25 30
------------- ----------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 5,132 $ 7,698 $10,265 $12,831 $15,397
75,000 8,632 12,948 17,265 21,581 25,897
100,000 12,132 18,198 24,265 30,331 36,397
125,000 15,632 23,448 31,265 39,081 46,897
150,000 19,132 28,698 38,265 47,831 57,397
175,000 20,532 30,798 41,065 51,331 61,597
</TABLE>
* Under the current tax laws, compensation in excess of $160,000 may not be
taken into account under the Company's pension plan. The $160,000 amount is
subject to adjustment by the Secretary of the Treasury in $10,000 increments
for increases in the cost of living.
BOARD COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executives are generally made
by the Compensation Committee of the Board consisting of Messrs. Baszucki,
Katten and Magnuson (Chair). All decisions by the Compensation Committee
relating to the compensation of the Company's executive officers are reviewed
by the full Board. Pursuant to rules designed to enhance disclosure of
companies' policies toward executive compensation, set forth below is a
report submitted by the Compensation Committee addressing the Company's
compensation policies for fiscal year 1998 as they affected Mr. Pudil, the
Company's President and Chief Executive Officer and the other executive
officers.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS. The Compensation
Committee's executive compensation policies are designed to provide
competitive levels of compensation that integrate pay with the Company's
annual and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements and assist the
Company in attracting and retaining qualified executives. The Company's
executive compensation has historically consisted of three components: (i)
base salaries, (ii) stock options and (iii) cash bonuses paid out pursuant to
annual profitability-based plans. The Compensation Committee has
historically established the base salaries of each executive officer
utilizing compensation surveys, performance against defined goals and
longevity with the Company. With respect to cash bonuses, the Compensation
Committee has historically established on an annual basis certain
profitability targets at the beginning of each fiscal year, pursuant to which
cash performance bonuses of up to 50% of an executive officer's base salary
can be paid. The Company has also used stock option grants as a key
ingredient of its executive compensation plans, reflecting the Compensation
Committee's position that stock ownership by management and stock-based
performance compensation arrangements are beneficial in aligning management's
and shareholders' interests in the enhancement of shareholder value. In
order to direct the Company's executives toward steady growth and to retain
the executive's services, the stock options granted are exercisable over a
ten-year period and vest over periods of up to 36 months.
RELATIONSHIP OF PERFORMANCE UNDER THE COMPENSATION PLANS. In fiscal
year 1998, bonuses were paid to officers and key employees equal to 50% of
their prior fiscal year salaries, as a result of the Company's financial
performance for the year. In addition, the Company granted stock options to
key employees in order to focus the Company's key employees, including the
Named Executives, on long-term Company
13
<PAGE>
performance which results in improvement in shareholder value and provides
earning potential to the executives.
At various times in the past the Company has adopted certain broad-based
employee benefit plans in which the Company's executive officers have been
permitted to participate. Benefits under these plans are not directly or
indirectly tied to Company performance.
CHIEF EXECUTIVE OFFICER COMPENSATION. The compensation package for
Michael J. Pudil, the Company's Chief Executive Officer, was set by the Board
of Directors. The compensation for Mr. Pudil was determined by using a
process and philosophy similar to that used for all executives. In fiscal
1998, Mr. Pudil received a bonus of $91,488.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Paul Baszucki Melvin L. Katten Gerald E. Magnuson
The preceding report shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 (the "1933 Act") or the
Securities Exchange Act of 1934 (the "1934 Act"), except to the extent the
Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the 1933 Act or the 1934 Act.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Magnuson, a Director and a member of the Compensation Committee and
the Company's Secretary, is retired from the law firm of Lindquist & Vennum
P.L.L.P. which was paid for legal services rendered to the Company during the
last fiscal year. Mr. Magnuson receives no financial benefit on account of
amounts paid by the Company to Lindquist & Vennum P.L.L.P. for such services.
It is anticipated that Lindquist & Vennum P.L.L.P. will continue to perform
legal services for the Company during the current fiscal year.
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include
in this Proxy Statement a line graph presentation comparing cumulative,
five-year shareholder returns on an indexed basis with a broad market index
and either a nationally-recognized industry standard or an index of peer
companies selected by the Company. The Company has chosen to use the Nasdaq
Stock Market (U.S. Companies) Index as its broad market index and the Nasdaq
Non-Financial Stock Index as its peer group index. The table below compares
the cumulative total return as of the end of each of the Company's last five
fiscal years on $100 invested as of August 29, 1993 in the common stock of
the Company, the Nasdaq Stock Market Index and the Nasdaq Non-Financial Stock
Index, assuming the reinvestment of all dividends:
14
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
August 29, August 28, August 27, August 25, August 31, August 30,
1993 1994 1995 1996 1997 1998
---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Washington Scientific $100 $95.652 $143.478 $117.391 $200.000 $230.435
Industries, Inc.
Nasdaq Stock Market (U.S.) $100 $104.096 $140.208 $158.071 $220.537 $209.705
Nasdaq Non-Financial Stocks $100 $101.878 $139.261 $153.824 $211.223 $197.781
</TABLE>
Since the Company's fiscal year ends on the last Sunday of August each
year, data in the above table reflects market values for the Company's stock
as of the close of trading on the Friday preceding the Company's fiscal year
end for each year presented but reflects market values for the Nasdaq indices
as of August 31 of each year.
DIRECTOR COMPENSATION
Directors who are not employees of the Company (currently all directors
except Mr. Pudil) were paid an annual retainer of $4,500 for calendar year
1997 and will be paid an annual retainer of $5,000 for calendar year 1998.
Each non-employee Director is paid a fee of $500 for each meeting of the
Board of Directors or any Committee attended, except that no payments are
made for Committee meetings which immediately precede or follow a Board
meeting. Mr. Martin receives an additional annual retainer of $25,000 for
serving as the Company's Chairman. Mr. Magnuson receives an additional
annual retainer of $4,000 for serving as the Company's Secretary.
Each non-employee member of the Board of Directors receives at the time
of election or re-election to the Board by the shareholders an option to
purchase 1,000 shares of the Company's Common Stock at a
15
<PAGE>
purchase price equal to the fair market value of the Company's Common Stock
on the date of such election or reelection. The term of each director option
is five years, unless the director leaves the Board, in which event his
option expires within 30 days of leaving the Board. Each director option is
exercisable in installments of 25% per year beginning six months after the
date of grant. If Proposal 3 is adopted, the option received by each
non-employee member of the Board would be increased to 2,000 shares.
The Company established a retirement program in 1982 for directors not
covered by any other retirement plan of the Company which provides for the
payment of an annual benefit equal to the annual retainer paid to directors
during the full fiscal year preceding retirement. The retirement benefit,
which is payable to directors who have served five years or more, commences
at the time the retired director becomes 65 years old or later retires, and
is subject to proportionate reduction if the director has served the Company
less than 15 years. The maximum number of years that the benefit is payable
is 10 years.
EMPLOYMENT AGREEMENTS
On January 9, 1997, the Company amended the employment agreement with
Michael J. Pudil pursuant to which Mr. Pudil is employed as the Company's
President and Chief Executive Officer. The agreement has a two-year term and
automatically renews for successive two-year terms unless either party
provides written notice to the other party of nonrenewal at least six months
in advance of the expiration of any two-year term. The agreement provides
that in the event of the termination of Pudil's employment for good reason or
in the event of termination of Pudil's employment without good cause,
payments of Pudil's base salary and the employer share of benefit premiums
shall continue for eighteen months, provided however that in the event of the
termination of Pudil's employment following a change in control of WSI, Pudil
shall be entitled to receive the compensation and benefits set forth in the
change in control agreement. On October 18, 1995, the Company entered into a
change in control agreement with Mr. Pudil. This agreement provides, among
other things, for a lump-sum cash severance payment equal to approximately
three times the average annual compensation over the preceding five years
plus certain fringe benefits under certain circumstances following a "change
of control" of the Company. In general, a change in control would occur when
there has been any change in the controlling persons reported in the
Company's proxy statements, when 20% or more of the Company's outstanding
voting stock is acquired by any person, when current members of the Board of
Directors or their successors elected or nominated by such members cease to
constitute at least 75% of the Board of Directors, when the Company merges or
consolidates with or sells substantially all its assets to any person or
entity, or when the Company's shareholders vote to liquidate or dissolve the
Company. However, a "change in control" would not occur if any of these
events is authorized, approved or recommended by the Board of Directors.
This agreement also prohibits disclosure of confidential information
concerning the Company and requires disclosure and assignment of inventions,
discoveries and other works relating to employment. If a change in control
had occurred at the end of fiscal year 1998, Mr. Pudil would have been
entitled to the approximate payment of $630,258.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of common stock and other equity securities of the
Company. These insiders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms
they file, including Forms 3, 4 and 5.
16
<PAGE>
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended August 30, 1998 all
Section 16(a) filing requirements applicable to its insiders were complied
with.
AUDITORS
A representative of Ernst & Young LLP is expected to be present at the
Meeting, will be given an opportunity to make a statement and will be
available to answer appropriate questions.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The proxy rules of the Securities and Exchange Commission permit
shareholders of the Company, after timely notice to the Company, to present
proposals for shareholder action in the Company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate
for shareholder action and are not properly omitted by Company action in
accordance with the Commission's proxy rules. The next annual meeting of the
shareholders of the Company is expected to be held on or about January 6,
2000 and proxy materials in connection with that meeting are expected to be
mailed on or about December 1, 1999. Shareholder proposals prepared in
accordance with the Commission's proxy rules must be received at the
Company's corporate office on or before August 2, 1999, in order to be
considered for inclusion in the Board of Directors' Proxy Statement and proxy
card for the 2000 Annual Meeting of Shareholders. Any such proposals must be
in writing and signed by the shareholder.
The Bylaws of the Company establish an advance notice procedure with
regard to (i) certain business to be brought before an annual meeting of
shareholders of the Company and (ii) the nomination by shareholders of
candidates for election as directors.
PROPERLY BROUGHT BUSINESS. The Bylaws provide that at the annual
meeting only such business may be conducted as is of a nature that is
appropriate for consideration at an annual meeting and has been either
specified in the notice of the meeting, otherwise properly brought before the
meeting by or at the direction of the Board of Directors, or otherwise
properly brought before the meeting by a shareholder who has given timely
written notice to the Secretary of the Company of such shareholder's
intention to bring such business before the meeting. To be timely, the
notice must be given by such shareholder to the Secretary of the Company not
less than 45 days nor more than 75 days prior to a date corresponding to the
date of mailing of the proxy materials for the previous year's annual
meeting. Notice relating to the conduct of such business at an annual
meeting must contain certain information as described in the Company's
Bylaws, which are available for inspection by shareholders at the Company's
principal executive offices pursuant to Section 302A.461, subd. 4 of the
Minnesota Statutes. Nothing in the Bylaws precludes discussion by any
shareholder of any business properly brought before the annual meeting in
accordance with the Company's Bylaws.
SHAREHOLDER NOMINATIONS. The Bylaws provide that a notice of proposed
shareholder nominations for the election of directors must be timely given in
writing to the Secretary of the Company prior to the meeting at which
directors are to be elected. To be timely, the notice must be given by such
shareholder to the Secretary of the Company not less than 45 days nor more
than 75 days prior to a date corresponding to the date of mailing of the
proxy materials for the previous year's annual meeting. The notice to the
Company from a shareholder who intends to nominate a person at the meeting
for election as a director must contain certain information as described in
the Company's Bylaws, which are available for inspection by shareholders as
described above. If the presiding officer of a meeting of shareholders
determines that a
17
<PAGE>
person was not nominated in accordance with the foregoing procedure, such
person will not be eligible for election as a director.
GENERAL
The Board of Directors of the Company knows of no matters other than the
foregoing to be brought before the meeting. However, the enclosed proxy
gives discretionary authority in the event that any additional matters should
be presented.
The Company's Annual Report to Shareholders for the fiscal year ended
August 30, 1998 is being mailed to shareholders with this Proxy Statement.
Shareholders may receive without charge a copy of the Company's Annual Report
on Form 10-K, including financial statements and schedules thereto, as filed
with the Securities and Exchange Commission, by writing to: Washington
Scientific Industries, Inc., 2605 West Wayzata Boulevard, Long Lake,
Minnesota 55356, Attention: Paul D. Sheely, or by calling the Company at
(612) 473-1271.
By Order of the Board of Directors,
Gerald E. Magnuson, SECRETARY
18
<PAGE>
WASHINGTON SCIENTIFIC INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 7, 1999
The undersigned hereby appoints George J. Martin, Gerald E. Magnuson,
Michael J. Pudil, or any of them, as proxies with full power of substitution
to vote all shares of stock of Washington Scientific Industries, Inc. of
record in the name of the undersigned at the close of business on November 9,
1998 at the Annual Meeting of Shareholders to be held in Minneapolis,
Minnesota on January 7, 1999, or at any adjournment or adjournments, hereby
revoking all former proxies.
1. AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE CORPORATE NAME.
/ / FOR / / AGAINST / / ABSTAIN
2. AMENDMENT TO THE ARTICLES OF INCORPORATION TO AUTHORIZE "BLANK CHECK"
PREFERRED STOCK.
/ / FOR / / AGAINST / / ABSTAIN
3. AMENDMENTS TO THE 1994 STOCK PLAN.
/ / FOR / / AGAINST / / ABSTAIN
4. ELECTION OF DIRECTORS:
/ / WITH AUTHORITY to vote for / / WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees
(except as marked to the contrary). listed below.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Paul Baszucki, Melvin L. Katten,
Gerald E. Magnuson, George J. Martin, Eugene J. Mora, Michael J. Pudil
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1),
(2), (3) AND (4) IN ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" SUCH
PROPOSAL IF THERE IS NO SPECIFICATION.
Dated:_____________________________________________
___________________________________________________
(Signature)
___________________________________________________
(Signature)
Please sign name(s) exactly as shown at left. When
signing as executor, administrator, trustee or
guardian, give full title as such; when shares have
been issued in names of two or more persons, all
should sign.
